CESTAT, CHENNAI BENCH
Burn Standard Co. Ltd.
Commissioner of Central Excise
FINAL ORDER NO. 280 OF 2012
STAY ORDER NO. 165 OF 2012
MISC. ORDER NO. 211 OF 2012
APPLICATION NOS. E/COD/392 of 2011 & E/S/230 OF 2011
APPEAL NO. E/370 OF 2011
MARCH 20, 2012
Mathew John, Technical Member
There is a delay of 56 days in filing the appeal. Appellant submits that this delay happened as their company was taken over by M/s. Steel Authority of India Ltd. and there has been some delay in office consequent to such changeover of the management and that the delay was not due to negligence. Considering the explanation given, the delay is condoned and the COD application is thus allowed.
2. The dispute involved in this case is that the appellant is using inputs in the manufacture of both exempted and dutiable products and the appellants did not follow procedures prescribed in rule 6 of the Cenvat Credit Rules, 2004 and did not maintain separate accounts in respect of goods used in the manufacture of exempted products. Consequently, the Revenue proposed to demand 10% of the value of exempted products as per provision in rule 6(3). For certain period, the amount demanded is 5% in view of change in the rate prescribed under rule 6(3) of CENVAT Credit Rules, 2004.
3. The counsel for appellant submits that the period involved in this case is January 2009 to December 2009. She also submits that retrospective amendment in CENVAT credit Rule 6 done by Section 73 of Finance Act, 2010 is applicable for this period also and, therefore, reversal of credit attributable to the inputs used in the manufacture of the exempted products is sufficient discharge of their liability. It is their contention that even before the retrospective amendment, during the relevant period, the rule in force authorized such reversal of credit and they have done such reversal as per their own method. But the Revenue was not satisfied by the procedure followed by the appellant and, therefore, Revenue has confirmed the demand for 10%/5% of the price of the exempted goods for the reason that the procedure prescribed in the rules at that particular time was not followed. It is her contention that they had systems in place by which the quantity of inputs which were going into the manufacture of exempted products could be correctly quantified and they have reversed proper amount of credit.
4. Learned authorized representative for Revenue submits that he does not dispute the fact that, if proper reversal of credit attributable to the inputs used in the manufacture of exempted products is done, there is no scope for further demand. However, the question whether credit has been properly reversed needs to be examined.
5. Considered the arguments from both sides. After the amendment of Rule 6 of CENVAT credit Rules, 2004 by Finance Act, 2010, in view of the provisions section 73 of Finance Act, 2010, when an assessee gave a calculation of credit attributable to the inputs used in the manufacture of exempted products, the only option available to Revenue was to either accept the calculation or say what is wrong with the calculation and give Revenue’s calculation with proper basis and ask the assessee to rebut Revenue’s calculation. It was no longer open to demand 10% of the price or 5% of the price as the case may be of the exempted products. Therefore, we feel that the order has not been passed properly. Therefore, after waiving the requirement of predeposit for hearing the appeal, we proceed to decide the appeal itself.
6. So, we allow the appeal by setting aside the impugned order and remanding the matter back to the adjudicating authority for calculating the amount to be reversed correctly after giving proper reason for rejecting the method given by the assessee. If the adjudicating authority is adopting a different method, or arriving at a different quantum of credit to be reversed, then he should communicate Revenue’s method to the assessee and give the assessee an opportunity to be heard in the matter. Both the stay petition and appeals are allowed accordingly.